U.S. auditor watchdog reports progress on China deal

Reuters News
Posted: May 08, 2012 11:43 PM
U.S. auditor watchdog reports progress on China deal

By Dena Aubin

NEW YORK (Reuters) - The main U.S. auditor watchdog said it is close to an agreement that will allow it to observe audit inspections in China, a first step toward doing joint inspections there.

The breakthrough in lengthy negotiations between the United States and China on joint inspections came last week during meetings in Beijing, said Jim Doty, chairman of the U.S. Public Company Accounting Oversight Board (PCAOB), which oversees the audit industry, in a telephone interview.

U.S. observations of audits inspections in China "will be a first step toward greater cooperation on cross-border oversight and joint inspections," Doty said.

The plan would let PCAOB officials observe Chinese authorities when they inspect audits that are done in China of U.S.-listed companies, according to Doty.

"There's every reason to believe we could do the observations in the fall, possibly even the summer," Doty said.

However, he added, "one can never guarantee the outcome of this."

The PCAOB and U.S. Securities and Exchange Commission have been working for months with the Chinese to try to hash out a deal that would allow joint audit inspections. The two U.S. agencies stepped up efforts to reach a deal after a rash of accounting scandals at China-based companies that list shares in the United States.

Doty said he met with Chinese officials last week while he was in Beijing for annual United States-China talks aimed at strengthening ties between the two countries.

He said his talks, with the chairman of the China Securities Regulatory Commission, Guo Shuqing, and senior representatives of China's Ministry of Finance "were very constructive."

The observations will not substitute for joint inspections, but the process "builds a relationship," Doty said.

(Reporting by Dena Aubin; Editing by Kevin Drawbaugh, Bernard Orr)